Since it was revealed that Sports Direct, Buckingham Palace, Cineworld and the Tate employ a large majority of their staff on ‘zero hour contacts’, it has become something of a controversial issue.
The Office for National Statistics currently estimates that 250,000 staff work on zero-hours contracts but on 5 August the Chartered Institute of Personnel and Development (CIPD) reported that as many as 1 million people may be working under zero hour contracts.
But what are they and why have trade unions and politicians got so worked up over them?
A zero hour contract is one where the worker does not have a fixed or minimum number of contractual hours. Instead, employers are able to engage workers on a casual basis according to business need. Often their contracts state that there is no obligation on the employer to offer work and no obligation on workers to accept work. In practice this generally means that when a person signs a zero hour contract with a company, they are put on a list or “bank” of available workers. Shifts are then allocated to those on the list and people who are able to do those hours accept it.
This allows employers the flexibility to run their business efficiently as they only pay employees for work which is necessary, available and completed. Some would argue that this in turn boosts profits and the economy.
However, recently Nick Clegg, the Deputy Prime Minister, said that he is personally concerned at the level of insecurity created by these contracts, even though he believed in labour market flexibility.
Concerns over zero hour contracts relate to two reasons:
A worker may be offered full-time hours in any given week / month or may not be offered any hours at all. They are vulnerable to reductions in hours and last minute shift cancellations at the whim of managers and the inherent uncertainty makes it difficult for them to plan their finances.
2. Lack of Protection
These workers are not entitled to a great deal of employment law protection as due to the casual nature of the work they are unlikely to be categorised as employees (although it is of course up to the Tribunals to determine employee status on all the facts). This means that statutory employee rights like: unfair dismissal, redundancy pay, notice requirements, maternity rights, statutory sick pay and paid holidays may be out of reach for zero hour contract workers.
Following the media uproar about zero hour contracts, which some see as the exploitation of the lowest paid workers, Nick Clegg has announced that the Business Department will launch a report over the summer into the number of people on zero hour contracts and any adjustments that need to be made. We await the outcome.
If you have any queries about zero hours contracts and how they affect you please contact our Employment Team.